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US ethics issues new rules for employees who own NFT

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Joyashree Dey Follow

INDIA

Jul, 21 2022

Jul, 21 2022

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The US executive branch employees who own NFTs will be required to disclose assets either hold for the investment of income worth more than $1,000 or produce over $200 in investment income during the reporting period.

According to the new legal advisory from the Office of Government Ethics by Director, Emory A. Rounds III, NFT holders who work at the office must disclose digital asset holdings for the ethical reasons.

“Public financial disclosure filers must report the purchase, sale, or exchange of collectible NFTs or F-NFTs that are securities when the value of the transaction is over $1,000.”It states.

The office is responsible for managing over 130 government organizations and the White House’s executive branch employees. The recommendation for staff members who submit public financial disclosures follows the peak of the NFT market toward the start of 2022.

Notably, the new advisory highlights NFTs and fractional NFTs as “virtual artwork, music, video files, trading cards, digital real estate or items in a virtual world.”

The document explains that the assets that are held “solely for personal, family, or household use are not held for investment or production of income.” Other domestic items, including furniture, clothing, and perishables bought for family use, are not reportable, as per earlier statements from the office.

According to the new rules, filers must report NFTs even if they are not “held for investment or the production of income,” and they produced over $200 in investment income in the reporting period. This implies if an employee buys an NFT for display but later sells it for more than $200, they would be needed to report the NFT as a source of income.

In the advisory, it is mentioned that a seven-part test for accessing whether an NFT is retained for personal use or investment purposes. For example, the test inquires whether the NFT was purchased to a great extent for its potential worth or personal or aesthetic reasons.

In July, the United States Office of Government Ethics chose to ban employees investing in crypto to deal with crypto-related guidelines and policies.


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Joyashree Dey

CBW - External Analyst

INDIA

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